Guide
Should you import machined parts from Vietnam FOB or Delivered Duty Paid?
FOB is the Incoterms 2020 rule under which the seller loads the goods on board a vessel at a named port of shipment, and risk passes to the buyer at that moment; the buyer books the ocean freight and handles everything on the import side. Delivered Duty Paid is the opposite end of the same rule set: the seller carries the goods to a named destination, clears them into the buyer’s country and pays the import duties.
By Saola Manufacturing engineering team · Published · Updated
Most comparisons of the two terms stop at who pays for the freight. For an OEM buying turned, milled or die-cast parts, the bigger questions sit on the US side of the ocean: who is the importer of record, who owes the duty if it is wrong, what value the duty is charged on, and who absorbs a tariff change that lands while a container is at sea. This guide answers them from the Incoterms 2020 rules and US customs law. It is general information for engineers and sourcing managers, not legal or customs advice, and it says nothing about the terms any particular supplier offers; confirm the specifics with your customs broker.
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What actually changes between FOB and Delivered Duty Paid?
Three things move from buyer to seller when you switch from FOB to Delivered Duty Paid: the point where risk passes, the ocean and inland freight, and the whole US import process, including the duty bill. The table below lines up who carries each obligation.
| Obligation | FOB (named port of shipment) | Delivered Duty Paid (named destination) |
|---|---|---|
| Delivery and risk transfer | On board the vessel at the port of shipment in Vietnam | At the named place in the buyer’s country, ready for unloading |
| Export clearance in Vietnam | Seller | Seller |
| Ocean freight and marine insurance | Buyer chooses and pays | Seller chooses and pays |
| US entry filing and classification | Buyer, usually through its customs broker | Seller, or a party the seller appoints |
| Importer of record | Normally the buyer | The seller or its nominee; must qualify under 19 USC 1484 |
| Duties and entry fees | Buyer | Seller, built into the delivered price |
| Tariff change before entry | Buyer absorbs it | Seller absorbs it, unless the contract says otherwise |
| Liability if the entry is wrong | Buyer, as importer of record | Whoever is importer of record |
Two things the table does not settle. Incoterms rules do not say when ownership of the goods passes or how and when the price is paid; the US International Trade Administration spells that out in its guide to Incoterms. Both belong in the purchase contract. And the rule only works if the named place is precise. “FOB Vietnam” names a country, not a port, and leaves the risk point open to argument.
Who is the importer of record, and why does it matter more than the freight bill?
The importer of record is the party that files the US entry and answers to Customs for it, and under FOB that is almost always you. Under Delivered Duty Paid the seller has to take that role or appoint someone who can, which is harder for a foreign company than it sounds.
Under 19 USC 1484, the importer of record must be the owner or purchaser of the goods, or a licensed customs broker designated by the owner, purchaser or consignee, and it must use reasonable care to enter, classify and value the goods. The duty that follows is, in the words of 19 CFR 141.1, a personal debt of the importer. Paying a broker does not discharge it if the broker never pays Customs, and a customs bond does not relieve the importer of it either.
A Vietnamese manufacturer can act as a nonresident importer, but 19 CFR 141.18 sets conditions for a nonresident corporation: a resident agent authorized to accept service of process in the state of the port of entry, and a bond with a resident corporate surety. Many sellers who offer delivered pricing therefore route the entry through a US affiliate, a freight forwarder or a third-party service. Before you accept a delivered quote, ask in writing who will appear as importer of record on the entry summary. If the answer is “you”, the term is not really Delivered Duty Paid, and the duty liability is yours after all.
Who pays if the tariff changes while the parts are on the water?
Under FOB the buyer pays whatever rate applies on the day of entry; under Delivered Duty Paid the seller does, unless the contract passes the change back. The rate is fixed at entry, not at purchase order or at loading.
The general rule is in 19 CFR 141.69: the rates of duty are those in effect at the time of entry, with separate rules for warehouse withdrawals and a few other entry types. Transit relief exists only when an individual action grants it, and it tends to be narrow. When USTR imposed its Section 301 forced-labor duties, including 12.5 percent on products of Vietnam, the July 2026 notice exempted goods already loaded and on their final leg before July 24, 2026 only if they were entered before July 28, 2026. The earlier Section 122 surcharge proclamation used the same kind of four-day window in February 2026. An ocean shipment from Vietnam that sailed the week before either date would still have been at sea when its window closed.
For a buyer, that makes the tariff clause as important as the price. Under FOB, budget for a rate change on anything that will enter more than a few weeks out. Under Delivered Duty Paid, read how the quote treats a new duty: a fixed delivered price that absorbs it, a clause that adds it at cost, or a quote that lapses. Any of those is workable, but only if you know which one you signed. The tariffs and country-of-origin page summarizes the regime in force for Vietnam-origin parts as of September 2026.
Is duty charged on the FOB price or on the delivered price?
US duty is charged on the transaction value, which excludes international freight, insurance and the US duties themselves, so it sits close to an FOB price whichever term you buy on. A delivered price has to be broken down so those elements can be taken out.
Per 19 CFR 152.103 and the CBP publication What Every Member of the Trade Community Should Know About: Customs Value, the price actually paid or payable excludes transportation and insurance for the international shipment, and it excludes customs duties and other federal taxes. An all-in delivered figure on the invoice, with no breakdown, leaves the importer of record either overpaying duty or deducting estimates it cannot support.
Two additions matter for machined and die-cast parts in particular. Packing costs are part of the value. And so are assists: the same CBP publication lists tools, dies and molds supplied by the buyer free or at reduced cost for use in producing the goods. If you pay for a die-casting die or a fixture separately from the piece price, the importer of record has to account for it in the value, whichever Incoterms rule the parts ship under.
Entry fees follow the same value. Per 19 CFR 24.23 the merchandise processing fee on a formal entry is 0.3464% of value, between a minimum and a maximum that CBP adjusts each fiscal year, and per 19 CFR 24.24 the harbor maintenance fee on ocean cargo is 0.125% of value. Under FOB they appear on your broker’s invoice; under Delivered Duty Paid they are inside the seller’s price.
Is FOB the right rule for a container of parts, or should it be FCA?
For containerized cargo, FCA is usually the better fit: FOB is one of the four Incoterms 2020 rules written for sea and inland waterway transport, and it passes risk only when the goods are on board, long after the seller has handed a container to the carrier at the terminal.
The ICC Incoterms 2020 rules group the eleven terms into seven for any mode of transport and four for sea and inland waterway only, a split the US International Trade Administration repeats. The explanatory notes to FOB point container shipments toward FCA, because a packed box of parts is normally delivered to a container terminal or a consolidation warehouse days before loading. Under FOB, damage in that gap is still the seller’s risk on paper, but it is hard to prove where it happened. Under FCA the handover to the carrier is the delivery point, so risk and physical control change hands together.
When does Delivered Duty Paid make sense for an OEM?
Delivered Duty Paid suits buyers without an import setup, low-volume or prototype orders, and anyone who wants a single landed price to compare. It costs visibility: you no longer see the classification, origin claim or value that the duty was calculated on.
That trade-off is sharper for metal parts from Vietnam than for most goods. Classification and country of origin decide the rate, and the origin test for a part machined from imported bar or cast from imported ingot is substantial transformation, which CBP decides entry by entry. If the seller is the importer of record, the seller carries the liability. But if its classification or origin claim fails, the parts can be held at the port, and your line is the one that stops. CBP also investigates evasion of antidumping and countervailing duties, including by transshipment, under its Enforce and Protect Act program, and an investigation freezes the supply chain whoever the importer is.
There is also a cost to letting someone else own the entry. Refunds after a court ruling, a corrected classification or a successful protest flow through the entry, which belongs to the importer of record. A buyer who paid a delivered price has no claim on that money unless the contract gives it one.
FOB, or FCA, suits buyers who already import through a broker, who buy the same part numbers repeatedly, and who want the classification and origin evidence in their own files.
What should your RFQ say about shipping terms?
Name the Incoterms rule, the exact named place and the edition, and ask the supplier to break out anything it includes beyond the ex-works piece price. That lets you compare quotes on the same basis and hand your broker a value it can defend.
- Rule, place, edition. For example “FCA [container freight station], Ho Chi Minh City, Incoterms 2020” or “FOB [port of loading], Incoterms 2020”. If you want a delivered price as well, name the destination address.
- Importer of record. For any delivered quote, ask who will file the entry and in whose name.
- Separated costs. Piece price, packing, tooling, freight, insurance and duty as separate lines, so the transaction value can be worked out.
- Tariff clause. What happens to the price if a duty rate changes before entry.
- Origin evidence. The material source and the operations performed in Vietnam, part by part, for your broker and your own reasonable-care file.
The same RFQ needs a complete drawing package; the RFQ package guide covers what to send with it. For parts made by CNC turning, CNC milling or die casting, you can send the package for a quote and state the shipping term you want priced; the terms available for your part are confirmed in the written quote.
Frequently asked
Does the Incoterms rule decide when I own the parts?
No. Incoterms rules allocate delivery, risk and costs. When title passes, and how and when the price is paid, belong in the purchase contract.
If my customs broker files the entry, is the broker liable for the duty?
Not in place of you. Under 19 CFR 141.1 the duty is a personal debt of the importer, and a payment to a broker that never reaches Customs does not discharge it.
Is the FOB price the same as the customs value?
Often close, but not always. Transaction value excludes international freight and insurance, as FOB does, but it adds packing and assists such as buyer-supplied dies, molds and fixtures when they are not already in the price.
Can a Vietnamese supplier be the US importer of record?
A nonresident corporation can make entry if it meets 19 CFR 141.18: a resident agent for service of process in the state of the port of entry and a bond with a resident corporate surety. Many use a US affiliate or a third party instead.
We import into the EU, not the US. Does this still apply?
The Incoterms side does. The customs side follows EU law instead, where the declarant, the customs value and the treatment of freight differ from US rules, so check them with your customs representative before comparing a delivered quote with an FOB one.
Sources
- Incoterms® 2020, International Chamber of Commerce, in force January 1, 2020
- Know Your Incoterms, US International Trade Administration, accessed September 2026
- 19 USC 1484, Entry of merchandise, via Cornell Legal Information Institute, accessed September 2026
- 19 CFR 141.1, Liability of importer for duties, via Cornell Legal Information Institute, accessed September 2026
- 19 CFR 141.18, Entry by nonresident corporation, via Cornell Legal Information Institute, accessed September 2026
- 19 CFR 141.69, Applicable rates of duty, via Cornell Legal Information Institute, accessed September 2026
- 19 CFR 152.103, Transaction value, via Cornell Legal Information Institute, accessed September 2026
- What Every Member of the Trade Community Should Know About: Customs Value, US Customs and Border Protection, revised July 2006
- 19 CFR 24.23, Fees for processing merchandise and 19 CFR 24.24, Harbor maintenance fee, via Cornell Legal Information Institute, accessed September 2026
- Notice of Actions in Section 301 Investigations Related to Forced Labor, USTR, Federal Register, July 28, 2026
- Proclamation imposing a temporary import surcharge (Section 122), Federal Register, February 25, 2026
- Enforce and Protect Act (EAPA), US Customs and Border Protection, page updated July 2026